Investor Relations 1Q 2019 - info.fila.co.krinfo.fila.co.kr/ir/ENG/DATA/2019_1Q_IR_Material.pdf · Brand renewal in Korea Distribution channel re-structuring process Cost-competitiveness

Investor Relations1Q 2019

History

1

“Leading Authentic Sports Brand Inspired by

the Style, Elegance and Passion of our Italian Heritage”

Founded by FILA

brothers in Biella, Italy

1911

1973

1991

2005

2007

2010

2011

First sports apparel

market (Tennis)

Established FILA Korea

FILA Korea MBO

FILA Korea acquired FILA

trademark and global assets

(USD 400M LBO)

FILA Korea IPO (081660:KS)

FILA Korea & Mirae Asset Global

Investments Consortium acquired

Acushnet Holdings Corp. (USD 1.2B LBO)

2016

FILA Korea became a controlling

shareholder of Acushnet Holdings Corp.

2

100%100%

100%

100%

15%

100%

GLBH Holdings(Acquisition Vehicle)

FILA Luxembourg(Trademark Owner)

FILA Korea(Controlling Shareholder)

Acushnet Holdings

Corp.

Full Prospect(JV with ANTA)

FILA Sport HK(In-house Sourcing)

FILA USA(USA, Canada, Mexico)

40 Licensees(Global Royalty)

Group Structure

Magnus Holdings

52%

FILA Holdings

(Holding Company)

20%

Brand renewal in Korea

Distribution channel

re-structuring process

Cost-competitiveness through

product sourcing strategy

Various collaboration

reflecting global Heritage

trends

Expanding into upper

channels of distribution in

the US:

Foot Locker, Bloomingdale’s,

Neiman Marcus etc.

Successful product

collaborations including

MSGM, Fendi, Urban Outfitters,

Baja East, Gosha Rubchinskiy,

Marion Bartoli (LOVE FILA by

Marion Bartoli), Nas (Nas x

Ghostbusters footwear

collection, Mountain Dew,

Staples etc.)

Successfully established FILA® as

leading high-end lifestyle casual

brand in China

Collaborations with Anna Sui, Jason

Wu and Ginny Hilfiger etc.

Led by Anta, a leading sports apparel

company in China, FILA® has been

expanding into major markets across

China, Hong Kong, Macau and

Singapore

Total of 40 licensees

3

FILA – A Leading Authentic Global Sports Brand

http://www.google.com.hk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjppLDm0r_NAhVKnZQKHawGDvIQjRwIBw&url=http://www.anta.com/&psig=AFQjCNF9zdiEi4USNnZFHplGr27W60zAYQ&ust=1466822771190034

FILA USA

FILA Licensee

Full Prospect

FILA Korea

FILA Group Business Overview

North America (U.S.A., Canada, Mexico)

Footwear based wholesale distributor

Apparel and footwear based retail and wholesale distributor

Total number of stores: 554 (as of 1QE 2019)

Multi-category: FILA, FILA KIDS, FILA UNDERWEAR, FILA GOLF

Joint venture (15% ownership) with ANTA Sports from 2009.

Offering premium sports & lifestyle products in China, Hong Kong, Macau, and Singapore

Contributes 3% of its wholesale revenue as Design Service Fee to FILA Korea

Total 40 licensees in Asia, North America, South America and EMEA

Revenue and profit contribution from licensee partners that operate the FILA branded

products globally

Direct

Indirect

4

Acushnet Hold.

Magnus Holdings Co., Ltd., a wholly-owned subsidiary of Fila Korea Co., Ltd., or Fila

Korea, owns approximately 52% of Acushnet Holdings Corp. as a controlling shareholder.

Acushnet Holdings Corp. designs, develops, manufactures, and distributes golf products

worldwide. The company operates through four segments: Titleist Golf Balls, Titleist Golf

Clubs, Titleist Golf Gear, and FootJoy Golf Wear.

Owned brands: Titleist, FootJoy, Vokey, Scotty Cameron, Pinnacle

5

3 months (Jan. - Mar.) ended 12 months (Jan. - Dec.) ended

[Unit: KRW mn]

2017 2018 Variance (%) 2019 Variance (%) 2016 2017 Variance(%) 2018 Variance(%)

Revenue 653,701 676,917 3.6% 834,576 23.3% 967,128 2,530,324 161.6% 2,954,643 16.8%

Gross Profit 307,576 341,998 11.2% 417,719 22.1% 418,971 1,240,530 196.1% 1,467,537 18.3%

G.P.(%) 47.1% 50.5% 3.5%p 50.1% (0.5%)p 43.3% 49.0% 5.7%p 49.7% 0.6%p

Operating Profit 48,882 84,932 73.7% 115,850 36.4% 11,838 217,466 1,737.1% 357,102 64.2%

O.P.(%) 7.5% 12.5% 5.1%p 13.9% 1.3%p 1.2% 8.6% 7.4%p 12.1% 3.5%p

Net Income 25,539 79,736 212.2% 96,210 20.7% 311,126 108,110 (65.3%) 210,050 94.3%

Consolidated Financial Summary

6

Consolidated Financial Summary (1Q 2018 & 1Q 2019)

Fila Consolidated Financial (With Acushnet) (Unit: KRW mn)

Fila Group (Without Acushnet) (Unit: KRW mn)

763,228

1,157,060 7.8%

15.1%

FY 2017 FY 2018

Revenue OPM

2,530,324

2,954,643

8.6%

12.1%

FY 2017 FY 2018

Revenue OPM

203,178

346,627

10.7%

17.1%

2018 1Q 2019 1Q

Revenue OPM

676,917

834,576 12.5%

13.9%

2018 1Q 2019 1Q

Revenue OPM

FILA USA

FILA Licensee

Full Prospect

FILA Korea












products globally

Direct

Indirect

7

Acushnet Hold.








[Unit: USD K]


Design Service Fee Income 1,940 4,149 113.9% 6,473 56.0% 6,811 10,686 56.9% 20,918 95.8%

FILA Korea Domestic Financial Summary

8


[Unit: KRW mn]


Revenue 66,185 103,539 56.4% 139,062 34.3% 306,179 342,462 11.9% 499,913 46.0%

Gross Profit 32,752 59,374 81.3% 85,368 43.8% 156,750 195,485 24.7% 297,369 52.1%

G.P.(%) 49.5% 57.3% 7.9%p 61.4% 4.0%p 51.2% 57.1% 5.9%p 59.5% 2.4%p

Operating Profit (8,545) 8,218 N/A 24,168 194.1% (31,021) 1,415 N/A 56,454 3,889.8%

O.P.(%) (12.9%) 7.9% N/A 17.4% 9.4%p (10.1%) 0.4% N/A 11.3% 10.9%p

Net Income (13,008) 13,890 N/A 19,496 40.4% (17,845) (3,389) N/A 59,017 N/A

* DSF (Design Service Fee) from Full prospect (JV with Anta Sports) is included

Full Prospect Design Service Fee Income Summary

9

FILA Products Displayed at the Multi-Brand Stores

9

FILA Domestic Products

10

FILA USA

FILA Korea







11

FILA Licensee

Full Prospect Joint venture (15% ownership) with ANTA Sports from 2009.





products globally

Direct

Indirect

Acushnet Hold.







FILA USA Consolidated Financial Summary

12


[Unit: USD K]


Revenue 59,872 70,502 17.8% 140,015 98.6% 319,928 304,665 (4.8%) 452,547 48.5%

Gross Profit 16,916 21,398 26.5% 49,457 131.1% 98,509 91,906 (6.7%) 145,198 58.0%

G.P.(%) 28.3% 30.4% 2.1%p 35.3% 5.0%p 30.8% 30.2% (0.6%)p 32.1% 1.9%p

Operating Profit (3,128) 1,305 N/A 9,082 595.9% 21,127 9,247 (56.2%) 34,085 268.6%

O.P.(%) (5.2%) 1.9% N/A 6.5% 4.6%p 6.6% 3.0% (3.6%)p 7.5% 4.5%p

Net Income (2,002) 396 N/A 5,911 1,392.7% 11,604 1,136 (90.2%) 23,262 1,947.2%

FILA USA Products

13

FILA Licensee












products globally

Indirect

14







FILA USA

FILA Korea

Full Prospect

Direct

Acushnet Hold.

FILA Global Royalty Summary

15


[Unit: USD K]


Asia 3,042 3,535 16.2% 4,433 25.4% 9,434 11,017 16.8% 14,228 29.1%

North America 1,780 1,738 (2.4%) 1,618 (6.9%) 7,620 6,192 (18.7%) 7,342 18.6%

South America 318 685 115.4% 1,167 70.4% 1,027 1,754 70.8% 2,941 67.7%

EMEA 3,765 4,228 12.3% 8,952 111.7% 14,073 16,023 13.9% 26,751 67.0%

Category 398 503 26.4% 459 (8.7%) 1,685 1,654 (1.8%) 1,616 (2.3%)

Total (Adjusted) 9,366 10,764 14.9% 16,703 55.2% 34,305 36,954 7.7% 53,241 44.1%

16

Global License Structure (40 licensees)

Global License Business

License period is 5 years (10 years for master licensees)

Based on the wholesale revenue from each licensee

On average, 6-7% of FILA’s wholesale revenue generated from each licensee

Each licensee has minimum guaranteed royalty (MGR) based

on the forecasted revenue

Semi-annual Global Collaboration Meetings (GCM) held to set broad, global

strategic guidelines among all licensees

FILA Luxembourg

(Trademark owner)

EMEASouth

AmericaAsia

Global

Product

10 regional

licensees

11 regional

licensees

1 master

licensee

8 category

licensee

North

America

1 master

licensees

9 regional

licensees

General License Conditions

17

Consolidated Balance Sheet (K-IFRS)

1Q 2019 FY 2018 FY 2017

Assets 3,663,470 3,304,340 3,078,924

Current Assets 1,556,141 1,337,878 1,154,081

Cash and cash equivalents 200,757 149,001 107,696

Trade and other receivables 650,916 473,864 387,342

Inventories 629,405 632,237 578,367

Other current assets 75,063 82,776 80,676

Non-current Assets 2,107,329 1,966,462 1,924,843

Property and equipment 424,872 310,716 323,527

Intangible assets 1,509,420 1,491,948 1,440,427

Other non-current assets 173,037 163,797 160,889

Liabilities 2,057,268 1,797,846 1,844,594

Current Liabilities 828,083 672,316 694,581

Trade and other payables 377,898 405,997 330,386

Borrowings 328,467 174,426 212,671

Bonds - - 69,558

Other current liabilities 121,717 91,893 81,966

Non-current Liabilities 1,229,185 1,125,530 1,150,014

Borrowings 734,617 746,950 855,614

Bonds 62,307 61,175 -

Other non-current liabilities 432,260 317,405 294,400

Total Equity 1,606,203 1,506,494 1,234,330

Consolidated Balance Sheet (K-IFRS)(KRW mn)

18

Appendix – Financial Summary

I. FILA Korea (unit: KRW mn)

3 months (Jan.-Mar.) ended 12 months (Jan.-Dec.) ended

2017 2018 Variance(%) 2019 Variance(%) 2016 2017 Variance(%) 2018 Variance(%)

Revenue 66,185 103,539 56.4% 139,062 34.3% 306,179 342,462 11.9% 499,913 46.0%

Gross Profit 32,752 59,374 81.3% 85,368 43.8% 156,750 195,485 24.7% 297,369 52.1%

G.P. % 49.5% 57.3% 7.9%p 61.4% 4.0%p 51.2% 57.1% 5.9%p 59.5% 2.4%p

O. Profit (8,545) 8,218 N/A 24,168 194.1% (31,021) 1,415 N/A 56,454 3,889.8%

O.P. % (12.9%) 7.9% N/A 17.4% 9.4%p (10.1%) 0.4% N/A 11.3% 10.9%p

Net Profit (13,008) 13,890 N/A 19,496 40.4% (17,845) (3,389) N/A 59,017 N/A

I-a. Full Prospect Design Service Fee Income (unit: USD '000)



Design Service 1,940 4,149 113.9% 6,473 56.0% 6,811 10,686 56.9% 20,918 95.8%

◆ 1Q Revenue (approx. +KRW 35.5bn)

- Increase in revenue mainly from FILA segment

- Increase in Design Service Fee Income contributed by Full Prospect (YoY approx. +56.0%)

◆ 1Q Operating Profit (approx. +KRW 16.0bn)

- Resulted from increase in revenue

- Resuled from increase in gross profit due to sales mix improvement with higher margin product sales

- Decrease in SG&A expense proportion to revenue (cost leverage effects) due to lower rate of increase in SG&A compared to revenue increase (49.4% → 44.0%)

◆ 1Q Net Profit (approx. +KRW 5.6bn)


- Corporate tax return in 1Q 2018 (approx. KRW 7.7bn) → Normalized NI YoY +214.5%

19


II. FILA USA Consolidated (unit: USD '000)



Revenue 59,872 70,502 17.8% 140,015 98.6% 319,928 304,665 (4.8%) 452,547 48.5%

Gross Profit 16,916 21,398 26.5% 49,457 131.1% 98,509 91,906 (6.7%) 145,198 58.0%

G.P. % 28.3% 30.4% 2.1%p 35.3% 5.0%p 30.8% 30.2% (0.6%)p 32.1% 1.9%p

O. Profit (3,128) 1,305 N/A 9,082 595.9% 21,127 9,247 (56.2%) 34,085 268.6%

O.P. % (5.2%) 1.9% 7.1% 6.5% 4.6%p 6.6% 3.0% (3.6%)p 7.5% 4.5%p

Net Profit (2,002) 396 N/A 5,911 1,392.7% 11,604 1,136 (90.2%) 23,262 1,947.2%

◆ 1Q Revenue (approx. +USD 69.5M)

- Market headwind from the mid-market disruption has shown improvement on retailers compared to last year

- Sales mix has improved with higher margin product (i.e. heritage etc.) through upper tier distribution channel reflecting the continuing market trends for retro

◆ 1Q Operating Profit (approx. +USD 7.8M)


- Severance package to former executive (approx. +USD 7.6M) → Normalized OPM in 1Q '19 : 11.9%

◆ 1Q Net Profit (approx. +USD 5.5M)

- Resulted from increase in revenue and margin

III. Global Royalty (unit: USD '000)



Asia 3,042 3,535 16.2% 4,433 25.4% 9,434 11,017 16.8% 14,228 29.1%

North America 1,780 1,738 (2.4%) 1,618 (6.9%) 7,620 6,192 (18.7%) 7,342 18.6%

South America 318 685 115.4% 1,167 70.4% 1,027 1,754 70.8% 2,941 67.7%

EMEA 3,765 4,228 12.3% 8,952 111.7% 14,073 16,023 13.9% 26,751 67.0%

Category 398 503 26.4% 459 (8.7%) 1,685 1,654 (1.8%) 1,616 (2.3%)

Total (Int_Adj) 9,366 10,764 14.9% 16,703 55.2% 34,305 36,954 7.7% 53,241 44.1%

◆ EMEA (approx. +USD 4.7M)

- Increase in revenue mainly from UK & Europe regions

◆ Asia (approx. +USD 0.9M)

- Increase in revenue mainly from Japan region

◆ South America (approx. +USD 0.5M)

- Increase in revenue mainly from Uruguay

20


IV. Consolidated Financial (unit: KRW mn)



Revenue 653,701 676,917 3.6% 834,576 23.3% 967,128 2,530,324 161.6% 2,954,643 16.8%

Gross Profit 307,576 341,998 11.2% 417,719 22.1% 418,971 1,240,530 196.1% 1,467,537 18.3%

G.P. % 47.1% 50.5% 3.5%p 50.1% (0.5%)p 43.3% 49.0% 5.7%p 49.7% 0.6%p

O. Profit 48,882 84,932 73.7% 115,850 36.4% 11,838 217,466 1,737.1% 357,102 64.2%

O.P. % 7.5% 12.5% 5.1%p 13.9% 1.3%p 1.2% 8.6% 7.4%p 12.1% 3.5%p

Net Profit 25,539 79,736 212.2% 96,210 20.7% 311,126 108,110 (65.3%) 210,050 94.3%

◆ 1Q Revenue (approx. +KRW 157.7bn)

- Increase in revenue contribution from FILA Group (approx. +KRW 143.5bn)

- Increase in revenue contribution from Acushnet Holdings Corp. (approx. +KRW 14.2bn)

◆ 1Q Operating Profit (approx. +KRW 30.9bn)

- Increase in operating profit contribution from FILA Group (approx. +KRW 37.5bn)

- Decrease in operating profit from Acushnet Holdings Corp. (approx. -KRW 6.6bn)

◆ 1Q Net Profit (approx. +KRW 16.5bn)

- Increase in net profit contribution from FILA Group (approx. +KRW 23.7bn)

- Decrease in net profit from Acushnet Holdings Corp. (approx. -KRW 7.2bn)

Disclaimer

21

This document includes information provided for the purpose of helping to understand the business, strategies, and financial situation of FILA KOREA Ltd. (hereinafter

referred to as “FILA”) and its group companies. It was not created to solicit investors to buy or sell FILA's stock. The uses of this document are advised to make their own

investment decisions and responsibility. This document has been prepared for presentation, illustration and discussion purpose only and is not legally binding.

Investment involves risk. Past performance figures are not indicative of future performance. Please carefully read through the documents and seek independent professional

advice before you make any investment decision. FILA has made every effort to ensure the accuracy of the information contained in this document. However, FILA does not

guarantee the appropriateness, accuracy, usefulness or any other matter whatsoever regarding the information. Regardless of the reason, FILA assumes no responsibility,

whatsoever, for any loss or damages resulting from changes, suspension or deletion of information contained on the document, or from the unauthorized alteration of said

information by a third party, or for damage resulting from the downloading or the use of the data.

The information described in this document may contain forward-looking statements concerning the future performance excluding the past and present fact. These forward-

looking statements contain risks and uncertainties, and do not guarantee future performance. Please note that forward-looking statements may differ from actual results

depending on changes in economic status, market trends and tax and the other systems. Please note that this document may be discontinued or terminated and that the

contents may be altered without advance notice. In addition, this document may not be readily accessible at certain times due to internal or external circumstances. It should

be recognized in advance that FILA assumes no responsibility for any trouble, loss, or damage caused thereby.

Documents

Investor Relations 1Q 2019 - info.fila.co.krinfo.fila.co.kr/ir/ENG/DATA/2019_1Q_IR_Material.pdf · Brand renewal in Korea Distribution channel re-structuring process Cost-competitiveness